In answer to this question, here is the answer as told by Koop in his Exceed SE FAQ:

If you look at your new pump pad (assuming you've opened it already) [Valius addition: or the arcade pad you are staring at] you'll see arrows making an X shape. There will also be a center yellow space with a big X in the center. These are your step fields...Each of the X is one space, for example the upper right corner is a space. These are the only 5 spaces you'll need to dance on. While in home they are soft padding, the true blue arcade has a very firm metal. So keep that in mind when stepping.

When you start up Pump it Up, and select the song you'll see a gray bar with silhouettes of the 5 spaces on your pad. While your song goes, you are required to match the arrow hitting the gray bar to the arrow on your pad. For example, if the center yellow shape hits the gray bar, you must hit the big yellow space on your pad in about the same time. With each step you make, you are given a grade, depending on how accurate you were.

Perfect - You were dead on target. Great - You were a little off but not bad.Good - You were somewhat off.Bad - Your timing is off. You hit the step too soon or too late.Miss - You completely missed the step.

In the arcade game, above your gray bar lies a glowing bar, this bar represents your "health bar" it starts off pretty filled, for each Perfect and Great you get, the bar increases. Goods do not change the bar, and bads and misses lower the bar, If the bar is very low and begins to glow red, any more misses will make you fail the song.

Another key aspect is the idea of Combo. When you begin to play more difficult songs, you will hit steps in a very constant rate. For each perfect and great, you add to the combo, Goods cause no effect [Valius addition: Goods will break the combo in some of the older versions] and Bad and Misses break the combo. This will come to matter later on.

In addition to this, here is a list of the mixes in which Goods broke the combo: